US yields rise as tariffs spur inflation fears

NEW YORK – US Treasury yields rose on Friday on concerns over the potentially inflationary impact of tariffs as trade wars between the US and its trading partners escalate, while a stock market recovery reduced safe-haven demand for US government debt.

Market participants are grappling with uncertainty over how many of President Donald Trump’s tariffs are going to be implemented as well as whether they will slow economic growth and lead to a renewed surge in prices.

“What you’ve had over the past week or two is a repricing of what’s called the Trump put lower for equities, while at the same time, understanding that tariffs are probably here to stay in some form and aren’t just a negotiating tactic,” said Zachary Griffiths, senior strategist at CreditSights.

Trump said on Thursday he was not going to change his mind on imposing sweeping reciprocal tariffs on all trading partners on April 2.

A report on Friday found that US consumer sentiment plunged to a nearly 2-1/2-year low in March and inflation expectations soared amid worries about tariffs.

Data this week has shown improving inflation, though some underlying components in the release of the consumer price and producer price reports for February were higher than expected.

That data will feed into the calculation of the Personal Consumption Expenditures Price Index, the Federal Reserve’s preferred inflation measure, which is due to be released on March 28. The inflation data for February is also seen as backward-looking, as it covers the period before tariffs were put in place.

The Fed is expected to hold interest rates steady when it concludes a two-day meeting next Wednesday, but investors will focus on Fed policymakers updated economic and interest rate projections for signs of whether they are becoming more concerned about the economic outlook.

“It’ll be interesting to see how the Fed re-marks its growth expectations and how they expect that to flow through to not only inflation, but what they ultimately do with the policy rate,” Griffiths said.

Fed funds futures traders see the US central bank as most likely to resume its rate cuts in June.

US stocks rebounded on Friday, reducing safe-haven demand for US bonds. Demand for Treasuries increased earlier this week amid sharp stock declines, which helped to keep 10-year yields near four-month lows reached earlier this month.

Higher German government debt yields, as Germany’s conservatives and two other parties agreed to a debt deal to dramatically boost spending, meanwhile, helped to pull US yields higher on Friday.

The yield on benchmark US 10-year notes was last up 3.4 basis points on the day at 4.31%. The 2-year note yield rose 6.2 basis points to 4.015%.

The yield curve between two-year and 10-year notes flattened by around 3 basis points to 29.5 basis points.

Traders are also watching discussions over a possible Russia-Ukraine peace deal.

The United States drew closer to its G7 allies on Friday, at least momentarily, to back Ukraine’s territorial integrity and warn Russia to follow Kyiv in accepting a ceasefire or face possible further sanctions.

The US Senate on Friday was poised to pass a stopgap spending bill and avert a partial government shutdown, removing one short-term risk that was contributing to investor anxiety.

(Reporting by Karen Brettell; Editing by Paul Simao and Nick Zieminski)

Fed on tap for tariff-jolted market as investors look for calm

NEW YORK – A US stock market rocked by President Donald Trump’s back-and-forth on foreign import tariffs faces a Federal Reserve meeting in the coming week, as investors look for hints about further interest rate cuts that could restore some calm to markets.

A weeks-long slide in stocks accelerated in recent days with the benchmark S&P 500 on Thursday confirming it was in a correction, ending down over 10% from its February 19 record high. While stocks ended the week on a positive note, with the S&P 500 rebounding sharply on Friday, the decline had wiped off more than USD 4 trillion in market value, with some of Wall Street’s highest fliers such as Nvidia and Tesla getting pummeled.

The Fed’s latest monetary policy meeting comes as Wall Street is increasingly worried about an economic slowdown, with concerns exacerbated by Trump ramping up his tariff war.

The US central bank is widely expected to hold interest rates steady on Wednesday, but investors are anticipating cuts later in the year and will be looking for signs the Fed may be preparing to move.

“The stock market is trying to get any type of insight as to when the Fed will be comfortable enough to implement their next rate cut,” said Dominic Pappalardo, chief multi-asset strategist at Morningstar Wealth. “I don’t think the onslaught of headlines and new policies coming from the White House is going to stop anytime soon.”

Prospects for rate cuts won a boost this week with tame consumer price data that brought some relief about inflation. The pace of inflation has cooled since 2022 when the Fed started its rate-hiking cycle, and while it remains above the central bank’s 2% annual target, recent disappointing economic data could start to take more prominence.

“The first step that the stock market would like to see from (the Fed) is them signaling that focus is shifting back to supporting economic activity away from the inflation fight,” Pappalardo said.

Investors over the past month have increased bets on more easing this year, with fed funds futures indicating nearly three quarter-point cuts expected through 2025, compared to the current rate of 4.25%-4.5%, according to LSEG data.

Crucial will be comments from Fed Chair Jerome Powell in his press conference after the monetary policy decision is announced.

“The market has repriced the Fed” over the last few weeks, said Walter Todd, chief investment officer at Greenwood Capital. “If he pushes back hard against that re-pricing that we’ve had in the futures market, then that could be problematic.”

In the meantime, some prominent strategists have become more downbeat on the outlook for the economy and for US stocks. Goldman Sachs dropped its 2025 year-end target for the S&P 500 to 6,200 from 6,500, while Yardeni Research lowered its “best-case” target for the index to 6,400 from 7,000. The S&P 500 ended on Friday at 5,638.94.

Volatility has been rising with the Cboe Volatility index this week hitting its highest level since August before receding somewhat.

Tariff news is still likely to be at the forefront for markets in the coming week, with analysts saying the levies could bite into corporate profits and drive up consumer prices.

In the latest salvo, Trump on Thursday threatened a 200% tariff on all wines and other alcoholic products from Europe. A day earlier, the European Commission said it will impose counter tariffs on $28 billion worth of US goods in response to blanket US tariffs on steel and aluminum.

While the Fed has been the “centerpiece” for markets in recent years, other policy dynamics are likely to drive markets in the next couple of months, said Nathan Thooft, chief investment officer for equity and multi-asset solutions at Manulife Investment Management.

“The bigger story is still going to likely be the back and forth that we continue to see on the tariff front,” Thooft said.

(Reporting by Lewis Krauskopf
Editing by Nick Zieminski)

Yields fall as weak stock markets boost safe haven demand

NEW YORK – US Treasury yields fell on Thursday as tumbling stocks boosted demand for safe haven US government debt with an escalating trade war between the United States and trading partners threatening to dent growth and boost inflation.

Uncertainty over the impact of what tariffs will be put in place and for how long has squeezed risk sentiment while questions also remain over what their ultimate impact on the economy will be.

There is “concern about the tariffs in addition to the uncertainty and the erratic implementation of the tariff policies,” said Lou Brien, strategist at DRW Trading.

US President Donald Trump said on Thursday that he would put a 200% tariff on all wines and other alcoholic products coming out of the European Union if the bloc did not remove its tariff on whiskey.

Trump’s 25% duties on all US steel and aluminum imports took effect on Wednesday. Canada has requested WTO dispute consultations with the US over the import duties.

Bonds largely shrugged off data showing that US producer prices were unexpectedly unchanged in February.

Traders view the report as backward-looking as it covers the period before tariffs were put in place. Some underlying components in the inflation report were also less benign than the headline suggests.

“The cooler-than-expected February PPI included some relatively hot increases in the components that feed into the Fed’s preferred PCE deflator,” Will Compernolle, macro strategist at FHN Financial, said in a report.

The Federal Reserve’s favorite inflation indicator, personal consumption expenditures, is due on March 28.

The yield on benchmark US 10-year notes was last down 3.4 basis points on the day at 4.282%. It earlier reached 4.353%, the highest since February 25.

The 2-year note yield fell 4.2 basis points to 3.953%.

The yield curve between two-year and 10-year notes steepened by around one basis point to 33 basis points.

Traders are also watching discussions over a possible Russia-Ukraine peace deal.

President Vladimir Putin said on Thursday that Russia supported a US proposal for a ceasefire in Ukraine in principle, but that any truce would have to address the root causes of the conflict and that many crucial details needed to be sorted out.

The Treasury saw soft demand for a USD 22 billion auction of 30-year bonds, the final sale of USD 119 billion in coupon-bearing debt this week.

The bonds sold at a high yield of 4.623%, around one basis point above where they traded ahead of the auction. Demand was 2.37 times the amount of debt on offer.

The US government saw fair demand for a USD 39 billion sale of 10-year notes on Wednesday and a USD 58 billion auction of three-year notes on Tuesday.

A possible US government shutdown is also in focus as Congress wrangles over a stopgap funding bill to avoid a partial government shutdown.

(Reporting By Karen Brettell; Editing by Nick Zieminski, Kirsten Donovan)

Oil settles down more than 1% on tariff worry, supply-demand expectations

CALGARY – Oil prices fell over 1% on Thursday as markets weighed macroeconomic concerns, including the risk that tariff wars between the US and other countries could hurt global demand as well as uncertainty stemming from a US proposal for a Russia-Ukraine ceasefire.

Brent futures settled USD 1.07, or 1.5%, lower at USD 69.88 a barrel. US West Texas Intermediate crude futures fell USD 1.13, or 1.7%, to USD 66.55 a barrel.

The International Energy Agency reported that global oil supply could exceed demand by around 600,000 barrels per day this year, with global demand now expected to rise by just 1.03 million bpd, off last month’s forecast by 70,000 bpd.

The report cited deteriorating macroeconomic conditions, including escalating trade tensions.

On Thursday, US President Donald Trump threatened to slap a 200% tariff on wine, cognac, and other alcohol imports from Europe, opening a new front in a global trade war and sparking investor worries about stiffer trade barriers around the world’s largest consumer market.

Trade tensions have rattled investors, consumers, and business confidence. US stock indexes fell, dragging down oil market sentiment despite favorable fundamentals such as government data showing tighter-than-expected oil and fuel inventories, said Phil Flynn senior analyst with Price Futures Group.

“It’s creating this push-pull dynamic,” Flynn said. “Do we focus on supply and demand, which still looks pretty bullish, or do we focus on tariffs?”

The tariffs situation is the major factor weighing on the market’s perception of oil demand growth in 2025, said Andrew Lipow, president of Houston-based Lipow Oil Associates.

“The expectation is that the tariffs and retaliatory tariffs are going to ultimately impact the consumer,” Lipow said.

Also on Thursday, Russian President Vladimir Putin said Moscow agreed with US proposals to stop fighting but any ceasefire should lead to a lasting peace and address root causes of the conflict.

The market is weighing the potential for a short-term ceasefire between Russia and Ukraine, though UBS analyst Giovanni Staunovo said he “remains skeptical” that this would boost the availability of Russian oil.

With Trump’s stated commitment to cheaper oil, Citi analysts said their outlook for Brent by the second half of 2025 is USD 60 a barrel.

On Wednesday, the Organization of the Petroleum Exporting Countries said Kazakhstan led a sizeable jump in February crude output by OPEC+. The producer group seeks to enforce adherence to agreed output targets, even as it intends to unwind production cuts.

Worries about flagging jet fuel demand weighed further on markets, with JP Morgan analysts saying that US Transportation Security Administration data showed “passenger volumes for March have decreased by 5% year-over-year, following stagnant traffic in February”.

However, the JP Morgan analysts added: “As of March 11, global oil demand averaged 102.2 million barrels per day, expanding 1.7 million barrels per day year-over-year and exceeding our projected increase for the month by 60,000 barrels per day.”

(Reporting by Amanda Stephenson in Calgary, Paul Carsten in London, Trixie Yap, and Yuka Obayashi. Editing by Chizu Nomiyama, Kirsten Donovan, and David Gregorio)

US dollar rises as markets consolidate positions; outlook remains downbeat

NEW YORK/LONDON – The US dollar rose against most major currencies including the Swiss franc and the euro on Thursday, as investors consolidated positions after selling the greenback for most of this week, but the outlook remained weak amid concerns about slowing growth arising from the Trump administration’s trade policies.

US President Donald Trump threatened to impose a 200% tariff on wine, cognac and other alcohol imports from Europe, opening a new front in a global trade war that has roiled financial markets and raised recession fears.

Trump on Wednesday also threatened to retaliate against the EU’s announcement that it would place counter-tariffs on USD 28 billion worth of US imports from next month.

Labor Department data on Thursday showed that US producer prices were unexpectedly unchanged on a monthly basis in February, but the prospects of tariffs are unlikely to keep prices down in the coming months.

“We’ve had a very large dollar weakening move in the previous days and weeks and it feels like we’re entering a bit of a consolidation period,” said Vassili Serebriakov, FX strategist at UBS in New York, who raised his year-end forecast for the euro against the dollar to USD 1.120 from USD 0.990.

“We do see the possibility that the dollar recovers because we’re still being hit with tariffs news and we have this early April reciprocal tariff deadline coming up.”

The dollar strengthened 0.11% to 0.883 against the Swiss franc.

The euro was down 0.28% to USD 1.0856 against the dollar but near the five-month top of USD 1.09470 hit earlier in the week.

Germany’s fiscal reset plan has provided additional support to the euro. Germany’s outgoing lower house of parliament will hold a special session on Thursday to debate the 500 billion euro fund for infrastructure and changes to borrowing rules in Europe’s largest economy to bolster defence.

“We are due for a dollar consolidation and a rebound, but it will depend on how much the trade policy and tariffs take precedence over the drivers of dollar weakness, which are European recovery and fiscal spending and weaker US data,” Serebriakov added.

STRONGER YEN

The Japanese yen strengthened 0.39% against the greenback to 147.84 per dollar, boosted by expectations of higher Japanese interest rates later this year.

While the Bank of Japan is expected to leave its key interest rate unchanged at next week’s policy meeting, more than two-thirds of economists polled by Reuters expect a rise of 25 basis points to 0.75% in the third quarter, most likely in July.

Currency markets also were processing data from Wednesday showing US consumer prices rose slightly less than expected in February, but the relief it offered could be temporary as the data did not fully capture the cascade of Trump’s tariffs.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.2% to 103.80. It is on track for two straight days of gains.

The Canadian dollar weakened 0.39% versus the greenback to C$1.4424 per dollar, a day after the Bank of Canada trimmed its key policy rate by 25 basis points, with trade disputes leaving traders on edge.

“The choppiness and volatility (in the dollar) are probably the bigger story, and it’s certainly being driven by uncertainty about tariffs, uncertainty about a potential trade war and whether it’s uncertainty about the emerging geopolitical environment,” said Marvin Loh, senior global market strategist at State Street in Boston.

(Reporting by Rae Wee in Singapore and Lucy Raitano in London; Editing by Jamie Freed, Rachna Uppal, Angus MacSwan, and Paul Simao)

Gold scales record high, sprints towards USD 3,000 milestone

Gold prices raced to a record high within touching distance of the key milestone of USD 3,000 per ounce on Thursday, with momentum driven by elevated tariff uncertainty and bets on monetary policy easing by the US Federal Reserve.

Spot gold climbed 1.6% to USD 2,979.76 an ounce, as of 13:55 ET (1755 GMT), after hitting its twelfth record peak this year earlier in the session.

Prices are up nearly 14% so far this year after a solid 27% gain in 2024.

US gold futures settled 1.5% higher at USD 2,991.3.

“Gold is in a secular bull market. We forecast prices to trade between USD 3,000-USD 3,200 this year,” said Alex Ebkarian, chief operating officer at Allegiance Gold.

US President Donald Trump’s fluctuating trade policies have helped gold, an asset preferred by investors amid geopolitical and economic turmoil. US Commerce Secretary Howard Lutnick said a recession would be “worth it” to get Trump’s economic policies in place.

Next on the radar is the Federal Reserve’s monetary policy meeting next Wednesday. The central bank is expected to keep its benchmark overnight interest rate in the 4.25%-4.50% range.

“The potential impact of the tariff and trade threats are impossible to model, forcing the Fed to gauge economic data to help it determine its next move,” said John Ciampaglia, CEO of Sprott Asset Management.

“We believe the Fed is stuck in a wait-and-see state.”

The central bank has reduced rates by 100 basis points since September, but paused its easing cycle in January. Traders expect policymakers will resume cutting borrowing costs in June.

Data from the US Labor Department showed producer prices were unexpectedly unchanged in February, while the consumer price index rose 0.2% last month after accelerating 0.5% in January.

“Strong ETF (exchange-traded fund) demand and continued central bank buying in a backdrop of geopolitical uncertainty and the continued uncertainty created by tariff changes has really continued to stoke appetite for gold,” said Standard Chartered analyst Suki Cooper.

SPDR Gold Trust GLD, the world’s largest gold-backed ETF said its holdings rose to 907.82 metric tons on February 25, the highest since August 2023.

Meanwhile, China continued its gold purchases for a fourth consecutive month in February, the People’s Bank of China data showed.

Spot silver rose 1.4% to USD 33.69 per ounce.

“A strong breakout above USD 33.30 could open the doors toward USD 34 for silver,” said Lukman Otunuga, senior research analyst at FXTM.

Platinum gained 0.6% to USD 990.25, while palladium added 0.9% to USD 956.99.

(Reporting by Ashitha Shivaprasad, Sarah Qureshi, Brijesh Patel, and Anmol Choubey in Bengaluru; Editing by Leroy Leo and Nia Williams)

Oil up 2% on tighter US supplies but tariff concerns loom

NEW YORK – Oil prices rose 2% on Wednesday, as US government data showed tighter-than-expected oil and fuel inventories, though investors kept an eye on mounting fears of a US economic slowdown and the impact of tariffs on global economic growth.

Brent futures settled USD 1.39, or 2%, higher at USD 70.95 a barrel. US West Texas Intermediate crude futures gained USD 1.43, or 2.2%, to USD 67.68 a barrel.

US crude stockpiles rose by 1.4 million barrels in the latest week, US government data showed on Wednesday, which was less than the 2-million barrel rise forecasters had expected.

US gasoline inventories fell by 5.7 million barrels, versus expectations for a 1.9 million-barrel draw, while distillate stocks also dropped by more than expected.

“This week, the oil build was smaller than expected, and gasoline and diesel draws were larger than expected,” said Josh Young, Chief Investment Officer, Bison Interests. “This evidences stronger demand and could see oil prices rise as a result.”

In recent days, crude futures have been supported by a weaker US dollar and the Energy Information Administration (EIA) moving away from earlier calls of strongly oversupplied oil markets this year, said UBS analyst Giovanni Staunovo.

The dollar hovered near a five-month low against other major currencies, as traders digested tit-for-tat US-EU tariffs and a potential Russia-Ukraine ceasefire.

The dollar index, which fell 0.5% to fresh 2025 lows on Tuesday, boosted oil prices by making crude less expensive for buyers holding other currencies. USD/

However, signs of cooling inflation offered investors some respite after US consumer prices increased less than expected in February. Still, US President Donald Trump’s aggressive tariffs on imports are expected to raise the costs of most goods in the months ahead. Some have taken effect and others have been delayed or are set to kick in later.

Markets worry that tariffs could raise prices for businesses, boost inflation, and undermine consumer confidence in a blow to economic growth.

“Fears of a US recession, weakness in US stock markets, and concerns over tariffs affecting key oil players such as China, introduced additional market uncertainty and these factors could continue to fuel a bearish sentiment, putting a lid on oil prices,” said Hassan Fawaz, chairman and founder of brokerage GivTrade.

Also on Wednesday, the Organization of the Petroleum Exporting Countries kept its forecast for relatively strong growth in global oil demand in 2025, saying air and road travel would support consumption.

“Trade concerns are expected to contribute to volatility as trade policies continue to be unveiled. However, the global economy is expected to adjust,” OPEC said in the report.

OPEC also published figures showing a 363,000 bpd increase in production by the wider OPEC+ group in February, led by a jump in Kazakhstan which is lagging in its adherence to OPEC+ output quotas.

(Reporting by Stephanie Kelly in New York, Arunima Kumar in Mumbai, Nicole Jao in New York, and Jeslyn Lerh in Singapore; Editing by Louise Heavens, Nick Zieminski, and David Gregorio)

US corporate bond spreads hit widest in about 6 months on recession fears

The spreads between the yields on corporate bonds and US Treasuries hit their widest since September this week, pointing to mounting investor worries about recession and a global trade war.

US investment-grade bond spreads hit 94 basis points on Tuesday, their widest level since Sept. 18, according to the ICE BofA Corporate Index. Junk bond spreads widened to 322 bps, also their widest since Sept. 18, according to Tuesday’s late update of the ICE BofA High Yield Bond Index.

Investors consider US corporate bond spreads a good gauge of financial market stress, especially the gap between yields on bonds issued by companies with poor credit ratings and ultra-safe US government debt. When the gap widens it shows less willingness to hold riskier “junk” bonds.

The widening in spreads comes as the latest sign of growing anxiety about the economic outlook following a series of import tariffs imposed by the Trump administration that raised the specter of a global trade war.

“This will be inflationary, and the Fed won’t likely be able to cut rates in this environment,” said Andrzej Skiba, head of BlueBay US fixed income at RBC GAM. “This could put pressure on fixed income assets, and we see more spread widening and risk ahead.”

A Reuters poll last week found 95% of economists across Canada, the US, and Mexico said the risk of a recession in their respective countries had increased following Trump’s chaotic tariff implementation.

“The escalation of tariff hostilities and re-rating in Tech sector valuations is causing contagion from stocks to credit in a way not observed in a while and is stoking fears that the economy could veer off the tracks,” Societe Generale analysts wrote in a Wednesday note.

The junk bond spread has opened up by 59 bps since a recent low on Feb. 18, JPMorgan analysts noted on Wednesday. They added that junk spreads are “biased wider” over the coming months, due to “vast macro uncertainty” surrounding trade policy, inflation and recession.

Corporate bond spreads are still tight on a historical basis, the analysts noted. Junk spreads late last year contracted to around 250 basis points, the lowest since 2007, before the Financial Crisis, during which they blew out to more than 2,000 basis points or twenty percentage points. They were well above 350 bps for the majority of 2022 and 2023, according to the ICE BofA High Yield Index.

Nicholas Elfner, co-head of research at asset manager Breckinridge Capital Advisors, said that as the impacts of President Trump’s potentially inflationary economic and fiscal policies become clearer, US corporate bond spreads are expected to widen further.

This should bolster the yield allure of corporate debt for investors, including from foreign investors, who overtook insurers and pension funds in 2024 in demand for corporate bonds, Elfner said.

(Reporting by Matt Tracy; Editing by Alden Bentley, Chizu Nomiyama, Alexandra Hudson, and Diane Craft)

Gold rises on tariff uncertainty, cooler US inflation data

Safe-haven gold rose on Wednesday, aided by tariff uncertainty and a cooler inflation report that keep bets for a US rate cut intact.

Spot gold was up 0.7% at USD 2,935.59 an ounce as of 02:32 p.m. ET (1832 GMT). US gold futures settled 0.9% higher at USD 2,946.80.

“The concern continues to be that we’re going to have tariffs and that will ultimately potentially cause some inflation,” said Bart Melek, head of commodity strategies at TD Securities.

Data showed that the US consumer price index rose 0.2% last month after accelerating 0.5% in January. However, the improvement is likely temporary against the backdrop of aggressive tariffs on imports that are expected to raise the cost of most goods in the months ahead.

Lower US inflation may give the Fed more leeway to cut interest rates, Melek added.

Last year, the Federal Reserve reduced interest rates by 100 basis points. Financial markets expect the Fed to resume cutting rates in June because of the deteriorating economic outlook, after pausing in January.

Non-yielding gold thrives in a low interest environment and is considered a safe investment during periods of economic and geopolitical turmoil.

The US Producer Price Index (PPI) and weekly jobless claims data due on Thursday are the next data sets on investors’ radar.

On the trade policies front, President Donald Trump’s increased tariffs on all US steel and aluminum imports took effect on Wednesday, stepping up a campaign to reorder global trade in favor of the US and drawing swift retaliation from Europe.

Spot silver added 1.1% to USD 33.31 an ounce.

Silver should outperform gold in our base case of a modest recovery in manufacturing activity, although a sharper slowdown in US growth is a key risk, UBS said in a note.

Platinum was up 1.3% at USD 987.40 and palladium rose by 0.2% to USD 947.50.

(Reporting by Ashitha Shivaprasad in Bengaluru, additional reporting by Ishaan Arora; Editing by Elaine Hardcastle, Shailesh Kuber, and Alan Barona)